Star bond fund manager Jeffrey Gundlach was in discussions to join Western Asset Management Co while he was employed at rival firm Trust Co of the West, he testified on Monday.
"The idea was that it could be a win-win situation for everyone," Gundlach told jurors, saying that a portion of his fixed-income team would have left for WAMCO and shared revenue with TCW in a negotiated separation arrangement.
The discussions took place in early 2009, the same year that Gundlach was eventually fired. WAMCO is a unit of Legg Mason Inc.
Gundlach and TCW are locked in a trial with hundreds of millions of dollars on the line which has given a rare glimpse into the inner workings of investment firms and the big personalities that run them.
Gundlach, the industry's self-styled "Pope" and "Godfather," returned to the stand on Monday in a dark blue pinstripe suit and calmly answered questions.
TCW fired Gundlach in late December 2009 and sued him a month later, accusing him of stealing trade secrets, plotting to form a new company using TCW proprietary information, and gutting the firm of its entire mortgage-backed securities team.
Gundlach fired back with a counter-lawsuit, alleging that his former employer owed him hundreds of millions of dollars in back wages.
In the weeks following his termination, Gundlach went on to form his own asset management company, DoubleLine Capital, along with three of his co-defendants in the case. Roughly 45 members of the TCW mortgage-backed securities group followed.
Gundlach wrote in an e-mail to co-defendant Barbara VanEvery in early 2009 that WAMCO had proposed giving him and his team 80 percent of the revenue that they brought over during the first 2-1/2 years after leaving TCW.
TCW is a unit of French bank Societe Generale.
The case in Superior Court of California, County of Los Angeles, is Trust Co of the West v. Jeffrey Gundlach et al, BC429385.